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Bolivia In Crisis Over Gas Sale To California

The Democracy Center On-Line
Volume 50 - October 13, 2003

Bolivia In Crisis Over Gas Sale To California

By Jim Shultz
The Democracy Center

Bolivia is once again in a state of political crisis. Since mid-September, a wave of protest has spread across the country demanding government action on a variety of issues - the main one suspension of a proposed mega-deal to sell Bolivian natural gas to California.

Nearly 40 people have been killed in clashes with the government near the capital city of La Paz. Over the weekend these clashes have escalated as the government sent soldiers and tanks into the streets in an attempt to break-up blockades of the highways. Monday afternoon President Gonzalo Sànchez de Lozada announced a suspension of the deal until the end of the year, but protests continue. Rumors abound about his possible resignation, or that he might make a declaration of martial law.


At the heart of Bolivia's current wave of protest is a proposed deal to export a portion of the country's mammoth natural gas reserves to California. A consortium of companies known as Pacific LNG is seeking a deal to ship the gas out of land-locked Bolivia through its Pacific coast neighbor, Chile.

That proposal runs smack into a deep, century-old, national resentment over Chile's seizure of Bolivia's last remaining access to the sea (in 1879). School children here are still taught that the nation must reclaim its ocean.

Even if the gas were piped to the Pacific some way other than Chile, polls say a majority of Bolivians would still oppose the gas deal with California. The International Monetary Fund (IMF) and others claim that the sale would be a cash boon for a country that really could use one. But average Bolivians aren't buying the argument that those benefits will ever trickle down to them.

"The money will all just end up in the pockets of the President, the ministers and other politicians", says Lourdes Netz, a former Roman Catholic nun. "Look at all the public companies that have been privatized. Have the people benefited?"

Bolivia's political system is notoriously corrupt (Transparency International rates it among the most dishonest in Latin America). When local corruption meets big international conglomerates looking for a way to pipe away natural resources at rock-bottom prices, the result is usually a sweetheart deal that leaves the dealmakers happy and the public left in the dust.

Many people here say, "First let's get a political system that we believe will actually sell the gas in the people's interests, then we can sell the gas."


Bolivia's "gas war" bears many similarities to the now-famous sweetheart deal three years ago in which the California-based engineering giant, Bechtel, was given control of the water system of Bolivia's third largest city, Cochabamba. Within weeks of taking control of the city's water, Bechtel hit poor families with huge increases in their water bills, enough to spark a popular rebellion and chase Bechtel out of the country.

In their closed-door negotiations with the Bolivian government, Bechtel officials were no doubt given reassurance that the government could handle any protests that might erupt. To defend Bechtel's contract the Bolivian government imposed a state of martial law and fired live rounds at its own people. Yet not even that was enough to make Bechtel's Bolivian deal stick.

Pacific LNG seems intent to follow in Bechtel's footsteps, having tanks sent out in their favor even before the first pipe is laid in the ground. However, the corporations eager to be the multi-billion dollar gas link between Bolivia and California might want to reflect a bit on whether they want to really follow Bechtel's lead. However clear the words may be on paper, an agreement with the Bolivian government on gas won't mean very much if it faces widespread public opposition.


One of the best ways to understand Bolivia is to think of South Africa in the last days of Apartheid in the early 1990s (a place where I also had the opportunity to work). In Bolivia the vast majority is unbelievably poor, mostly Indian, and struggles for basic survival. The country is run, however, both politically and economically, by a tiny, wealthy elite that seems mostly intent on protecting its privileges. One Bolivia lives in adobe houses without running water. The other vacations at Disney World.

This conflict erupts periodically in violent clashes as labor groups, coca farmers, teachers, university students and other sectors take to the streets to protest government policies. Bolivia's last serious eruption of protest, which left 33 people dead, was in February, over the government's implementation of an IMF-pressured economic belt-tightening package.

The pattern repeats itself over and over again. Social movements make demands and the government ignores them. Those movements then take to the streets and the government sends in police and soldiers. Eventually people get killed and the Catholic Church persuades the government and movement leaders to sit down for talks. The government makes a series of promises, which it then breaks, and the cycle begins once more.

While Bolivia's social movements enjoy broad public support for their demands - a fair deal or no deal on gas, opposition to privatization, etc. - the non-protesting majority is growing weary of their tactics. As the old saying goes, "When you have a hammer everything looks like a nail." In Bolivia, every protest seems to turn into highway blockades and other disruptions that hurt the poor more than anyone else. Unfortunately, it seems that massive disruption is the only language that Bolivian political leaders can hear.

If Pacific LNG follows Bechtel's path - watching on CNN as Bolivia falls into bloody chaos on its behalf - its dreams of a California gas deal will also fall into chaos and its public reputation, deservedly, will pay a heavy toll. Instead, it should tell the Bolivian government to put away its tanks and tell the Bolivian people that it wants to make a deal worthy of broad public support. Consumer groups in California ought to push them to do just that.


THE DEMOCRACY CENTER ON-LINE is an electronic publication of The Democracy Center, distributed on an occasional basis to more than 2,000 nonprofit organizations, policy makers, journalists and others, throughout the US and worldwide. Please consider forwarding it along to those who might be interested. People can request to be added to the distribution list by sending an e-mail note to mailto: Newspapers and periodicals interested in reprinting or excerpting material in the newsletter should contact The Democracy Center at "". Suggestions and comments are welcome. Past issues are available on The Democracy Center Web site.


SAN FRANCISCO: P.O. Box 22157 San Francisco, CA 94122 BOLIVIA: Casilla 5283, Cochabamba, Bolivia TEL: (415) 564-4767 FAX: (978) 383-1269 WEB: E-MAIL:

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